Under the heading of random musing, history, step functional moves, and just some things to think about:
This Roche bid for ANDS further reinforces my distaste for standard technical analysis in the substandard world of small biotech companies. The market value of a company is set by the marginal trading and is completely divorced from the potential value of the IP. A month ago ANDS was trading for .60 and Friday for $1.04. Today the Roche bid has it trading for $3.65 because they like the results on a particular HCV test. (And, up until Friday I am sure there was somebody on the ANDS message board whining profusely about mgmt and every other thing.)
Strange things happen in the "world" of small biotech stocks. This "world" is as indifferent to standard technical analysis as quantum mechanics is indifferent to Newtonian physics. Hence I dont give much credit to all the penny by penny technical discussion.
The following examples are of some well known biotech stocks that had these similar qualities before their big moves:
1. ALL WERE COMING OFF TEN YEAR LOWS OR NEAR LOWS OR ALL TIME LOWS.
2. All had MISERABLE TECHNICAL CHARTS long, short, and intermediate term, sideways, upside down and any other way one could look at the picture. ALL HAD CHARTS SCREAMING AT SHAREHOLDERS TO SELL THEIR SHARES.
3. All of their managements were vilified by many shareholders.
4. All of them had their biotechnology highly doubted as to viability and versus competition.
5. Some (Pharmasset) have yet to clear FDA or bring any viable product to market. I.E. OVER FIVE BILLION MARKET CAP ON "A PRIORI"
SCIENCE. ( As an aside, for those of you who are annoyed with PPHM BOD and mgmt, this is a real example of the value of "connectivity" to the financial community and biotech world. Some of this market cap is based on scientific achievement but IMO a goodly percentage is based on "connectivity". There is plenty of upside for PPHM shareholders if there is improvement in "connectivity"----but I digress.) (Roche is also invested in Pharmasset)
6. The moves occurred in different time frames and types of markets.
Stock Examples:
Dendreon (Smaller company more recent move)
$2.55 low in Mar 2009 $57.67 high in April 2010 increase of 22.5x
Vertex (A larger company and longer move)
$8.61 low in April 2005 $58.87 high in May 2011 increase of 6.8x
Pharmasset
$3.81 All time low in Mar 2009 $88.52 All time high in Oct 2011 (this month) increase of 23.2x
Human Genome Science
$5.69 low in Sep 1998 $116.38 in Mar 2000 increase of 20.45x
In case you think this could never happen in PPHM-- well it did.
Peregrine itself underwent just such a move (when it was still Techniclone and for no reason that I was ever able to discern other than false expectation or price "manipulation".) At the time of the move PPHM had worse mgmt and BOD (IMO) than currently, worse balance sheet, much worse science, no imaging technology, much worse patent position, no regulatory expertise, little manufacturing expertise, no viral expertise, no index listing such as Russell, very small market cap, no partners.
Peregrine:
$1.25 low Dec 1999 $83.12 high March 2000 increase of 66.5x (based on post split prices) Pre split, when the move occurred, the actual spread was $ .25 to $16.62)
How strange this biotech world is when you analyse it closely and there are many more examples both lesser and better known that would qualify for such a list as above. One such example was Syntex in the "birth control" area. Syntex did most of its testing re birth control in Mexico, its results initially were highly suspect, and (for those of you that fret about the RS in PPHM) Syntex actually went "bankrupt" several times before having one of the largest stock runs of all times and ushering in the "sexual revolution".
It will be interesting to watch what happens to the "current day" PPHM should it ever slip a puck past the FDA goalie, or partner, or change its method of financing, or improve its BOD, or sell or license peripheral assets (HCV) or IP, or in general start to be credited "a priori" for its large body of IP.
IMO, step back every now and then from all the craziness, view the bigger picture, and stay the course.
Best Regards,
RRdog
